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Community Affairs References Committee The Senate Community Affairs References Committee A hand up not a hand out: Renewing the fight against poverty Report on poverty and financial hardship March 2004 Commonwealth of Australia 2004 ISBN 0 642 71199 2 Senate Community Affairs References Committee Secretariat Mr Elton Humphery (Secretary) Ms Christine McDonald (Principal Research Officer) Mr Peter Short (Senior Research Officer) Ms Leonie Peake (Research Officer) Ms Ingrid Zappe (Executive Assistant) The Senate Parliament House Canberra ACT 2600 Phone: 02 6277 3515 Fax: 02 6277 5829 E-mail: [email protected] Internet: http://www.aph.gov.au/senate_ca This document was produced by the Senate Community Affairs References Committee Secretariat and printed by the Senate Printing Unit, Parliament House, Canberra. iii MEMBERSHIP OF THE COMMITTEE Members Senator Steve Hutchins, Chairman ALP, New South Wales Senator Sue Knowles, Deputy Chairman LP, Western Australia Senator Gary Humphries LP, Australian Capital Territory Senator Meg Lees APA, South Australia Senator Jan McLucas ALP, Queensland Senator Claire Moore ALP, Queensland Participating Members Senator the Hon Eric Abetz LP, Tasmania Senator Lyn Allison* AD, Victoria Senator Mark Bishop ALP, Western Australia Senator Kim Carr ALP, Victoria Senator Grant Chapman LP, South Australia Senator Helen Coonan LP, New South Wales Senator Trish Crossin ALP, Northern Territory Senator Kay Denman ALP, Tasmania Senator Alan Eggleston LP, Western Australia Senator Chris Evans ALP, Western Australia Senator the Hon John Faulkner ALP, New South Wales Senator Alan Ferguson LP, South Australia Senator Jeannie Ferris LP, South Australia Senator Michael Forshaw ALP, New South Wales Senator Brian Greig** AD, Western Australia Senator Brian Harradine IND, Tasmania Senator Len Harris PHON, Queensland Senator Ross Lightfoot LP, Western Australia Senator Joseph Ludwig ALP, Queensland Senator Sue Mackay*** ALP, Tasmania Senator Brett Mason LP, Queensland Senator Kerry Nettle AG, New South Wales Senator Julian McGauran NATS, Victoria Senator Shayne Murphy IND, Tasmania Senator Kerry O'Brien ALP, Tasmania Senator Marise Payne LP, New South Wales Senator John Tierney LP, New South Wales Senator John Watson LP, Tasmania Senator Ruth Webber ALP, Western Australia * for matters relating to health ** for matters relating to family and community services *** for matters/hearings relevant to Tasmania v TABLE OF CONTENTS MEMBERSHIP OF THE COMMITTEE ............................................................... iii OVERVIEW ....................................................................................................................... xv RECOMMENDATIONS ........................................................................................... xxvii CHAPTER 1 INTRODUCTION ....................................................................................................1 Terms of reference..................................................................................................1 Conduct of the inquiry............................................................................................1 Structure of the Report ...........................................................................................2 The Committee's approach to poverty....................................................................3 CHAPTER 2 DEFINING AND MEASURING POVERTY........................................................5 What is poverty?.....................................................................................................5 Poverty and inequality..........................................................................................10 Measuring poverty................................................................................................12 Income-based poverty lines...............................................................................13 Budget standards ...............................................................................................15 Consensual approach.........................................................................................17 Living standards studies ....................................................................................18 Problems in measuring poverty............................................................................20 Data sources.......................................................................................................20 Definition of income..........................................................................................21 The measure of resources ..................................................................................22 Alternative measures of poverty...........................................................................24 Deprivation indicators .......................................................................................24 Use of expenditure data.....................................................................................27 The income unit.................................................................................................28 Time period .......................................................................................................29 Equivalence scales.............................................................................................29 Updating poverty lines .........................................................................................30 Conclusion............................................................................................................31 vi CHAPTER 3 POVERTY AND INEQUALITY IN AUSTRALIA............................................33 The origins of poverty research............................................................................33 The Henderson Commission of Inquiry ............................................................33 Extent of poverty in Australia ..............................................................................35 Who is in poverty today?...................................................................................41 Poverty by State/Territory .................................................................................43 Income inequality .................................................................................................45 Impact of the GST .............................................................................................49 Impact of taxes, transfers and other benefits.....................................................50 Wealth distribution ............................................................................................52 Conclusion............................................................................................................53 CHAPTER 4 UNEMPLOYMENT AND THE CHANGING LABOUR MARKET...............55 The changing labour market.................................................................................56 Unemployment and underemployment ................................................................57 Joblessness and poverty........................................................................................59 Creating more jobs ...............................................................................................60 Full employment................................................................................................61 Job creation schemes .........................................................................................62 Conclusion.........................................................................................................64 Role and effectiveness of the Job Network..........................................................65 Conclusion.........................................................................................................69 Long-term unemployed ........................................................................................70 Skill development and work experience ...........................................................71 The working poor .................................................................................................73 Life for the low paid..........................................................................................75 Addressing the problem of low pay ..................................................................79 Conclusion.........................................................................................................84 Casualisation.........................................................................................................85 Conclusion.........................................................................................................89 Labour-hire ...........................................................................................................90 Changing industrial relations environment ..........................................................93 vii CHAPTER 5 INCOME SUPPORT..............................................................................................97 Income support arrangements...............................................................................97 Adequacy of income support payments ...............................................................99 Payments – how adequate is the 'safety net'? ....................................................99 Income based poverty measures......................................................................100 Budget standards
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